You Go First: Salary Transparency Almost Closes Gender Pay Gap
Pay transparency closes the gender pay gap in some industries.
The good news if you are a woman working in healthcare, architecture, engineering, education and a few other industries is that pay equity is the norm when your organization has pay transparency.
“If you are a woman working in healthcare, architecture, engineering, or education, #payequity is the norm when your organization has #pay #transparency. ”
The bad news is if you are a female in food services, retail, customer service, transportation and a few more male-dominated fields, you will likely be paid less than men doing the same job.
The new Payscale report, Does Pay Transparency Close the Gender Wage Gap? “aimed to determine whether increased pay transparency could mitigate the unconscious bias of managers and HR leaders who set compensation,” according to Payscale.
The research shows being open about salaries works to close the gap—in most fields, but not all.
“The new @Payscale report, Does Pay Transparency Close the Gender #WageGap? “ found that being open about salaries works to close the gap.”
“This latest research shows just how powerful transparent pay practices can be for organizations,” says PayScale CEO Scott Torrey. “Most employers want to ensure they’re paying fairly, so we encourage HR departments and senior leaders to adopt transparent pay practices as an important step toward achieving this goal.”
Read more in Take The Lead on Payscale salary tips
In this study, PayScale examined the ‘controlled’ pay gap, a comparison of pay for men and women doing the same job in the same geographic location, same experience, education, etc. This approach shows women earn 98 cents for every dollar earned by men. When a two percent difference in pay is compounded over the course of a career, it adds up to a woman taking home significantly less pay than her male peers.
Age is also a factor. According to Yahoo Finance, “But when you look at the uncontrolled data, which examines the median earnings of all women vs. men, the gap widens more considerably. Women under the age of 30 earn 84 cents for every $1 a man earns; for women aged 45 and older, the gap leaps to 70 cents for every $1 earned by a man.”
Without pay transparency, the average woman earns 80 cents on the dollar that every man earns. “This means women stand to lose $406,760 over the course of a 40-year career at the uncontrolled wage gap of $0.80.”
“Without #pay #transparency, the average woman earns 80 cents on the dollar that every man earns. #PayGap ”
However, when employees said they have a transparent pay process at their company, women were estimated to earn between $1 and $1.01 for every dollar earned by men— effectively erasing the gender pay gap.
“Women were estimated to earn between $1 and $1.01 for every dollar earned by men with #transparentpay— effectively erasing the gender #paygap. ”
This means you are upfront about what you earn. No hiding.
“Pay transparency will be a part of any modern compensation plan, as the future is trending in this direction, but there is a spectrum for pay transparency that ranges from undeveloped to extreme and different organizations will target different levels according their strategy for every $1,” Payscale reports.
BuiltIn recently published data on the gender gap including stats on “the uncontrolled or unadjusted gender pay gap is calculated by taking the ratio of median earnings of all women to all men, regardless of industry, skill level, education or any other type of diverse demographic that can affect an individual's income.”
Read more in Take The Lead on asking for more money
“Over the past five years, the pay gap has continued to decline, and between 2015-2019, the uncontrolled gender pay gap improve by $0.05; women went from earning $0.74 to $0.79 for every dollar men earned. At the same time, the controlled gender pay gap improved to $0.98 for every dollar a man earned, compared to $0.97 in 2015.”
Other factors to the gap include the tendency for women to ask for raises less often. According to BuiltIn, “Women typically ask for lower salaries and raises less frequently than men; as of 2019, women asked for about 4% less than men, and women ask for lower salaries 61% of the time — a 5% improvement from 2018. Additionally, 69% of women and 71% of men ask for a salary increase from the initial offer, however, women negotiate salary 7% less than men do.”
“Other factors to the gap include the tendency for women to ask for raises less often. #PayEquity #PayGap”
New data from Citigroup shows a large gender gap of 27 percent in wages. According to CNBC, “A staggering gender pay gap at one of the U.S.’s top Wall Street banks has prompted the company to readjust the salaries of some of its female employees.Citigroup recorded a 27% shortfall in the average pay of its female employees compared to their male peers for 2019, the bank revealed.”
And while it would be great to sit down with co-workers and have everyone share their salary info, that doesn’t always happen.
Read more in Take The Lead on closing the gender pay gap
According to HuffPost, that’s why there are anonymous Google spread sheets for salary info.
“Sharing #salary info with coworkers doesn’t always happen. According to @HuffPost, that’s why there are anonymous Google spread sheets for salary info. ”
“Workers across a number of industries are creating their own widely shared salary databases, with employees anonymously entering their earnings for all to see. In 2019, there were organized efforts to capture industry-wide salary information for arts and museum workers, media workers, baristas in different cities, workers at Jewish nonprofits, academics, design interns, workers in publishing, staff at creative agencies, and paralegals, just to name a few. Adding salary info to these lists usually works like this: Through a Google Form, individuals enter information anonymously about their salary and organization, usually with the option to include years of experience, geographic location, race, gender and sexual orientation, as well as industry-specific information such as awards, worker injuries incurred or billable hours.”
Katica Roy, CEO of Pipeline Equity and Take The Lead contributor, writes in Fast Company, “The impact of pay inequity impacts almost all dimensions of our society: Social Security, healthcare, higher education, the middle class, criminal justice, immigration, international trade, Wall Street, democracy and election integrity, LGBTQ+ rights, venture capital and entrepreneurship, GDP and economic growth, binding arbitration, climate change, and foreign policy.”
Read more on Katica Roy in Take The Lead
Roy writes, “But the issue of pay inequity doesn’t ‘stop’ at the household level. It affects everyone. Closing the gender pay gap alone would increase GDP by $512 billion.”
Payscale reports, “Closing the gender wage gap is important not only in the pursuit of equity and fairness, but because women represent a significant portion of the available talent in the marketplace. In addition to being highly educated, women also have a positive impact on profits. According to a 2016 study by the Peterson Institute for International Economics, women in leadership yielded a 15 percent increase in profitability for companies that went from having no women in leadership to a 30 percent representation. Unfortunately, women make up only 21 percent of board seats and only 5 percent of CEOs in the S&P 500.”
Read more in Take The Lead on salary negotiation advice
If pay transparency is good for everyone, what’s the holdup?
“Pay transparency is a critical component of a fair and data-driven compensation plan that will be good for business beyond equity and regulatory compliance. With pay transparency and a well-communicated compensation plan, employees know how they are valued and why. Organizations who take the time now to develop standards and philosophy around compensation and pay transparency will thus be well positioned to attract top talent and be leaders in the future,” Payscale reports.
